Boeing self-funds F-15E production in anticipation of Saudi deal

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Boeing is self-funding production of F-15E strike fighters in the expectation that Saudi Arabia may sign a contract at some point before November 2012, said chairman, president and chief executive Jim McNerney.

McNerney's comments provide some insight into the status of an opportunity to sell 84 F-15SA fighters to Saudi Arabia, along with radar and weapon upgrades for the country's existing F-15 fleet.

The US Defense Security Cooperation Agency notified Congress on 20 October 2010 that Riyadh had requested the possible sale, but the deal has remained unsigned after more than a year.

 © USAF

The wait has created scheduling problems for the manufacturer. Boeing will deliver the final F-15Es, on order by Singapore and South Korea, in the first half of next year, which leaves the future of the its St Louis production line in Missouri uncertain in the absence of a sale to the Saudis.

"We do have some investment in the supply chain and we wouldn't have made it if we weren't confident [the Saudi contract] wasn't going to come home," McNerney told analysts during a conference on 26 October to discuss its third-quarter earnings.

"We're all hopeful this will get done over the short-term timeframe," McNerney said.

Morgan Stanley analyst Heidi Wood asked McNerney whether the Saudis could postpone a decision until after the next US election in November 2012, using the potential $30 billion sale as a possible bargaining tool with the next administration.

McNerney replied that recent events, including the death of Saudi Crown Prince Sultan Ibn Abdul-Aziz, who was the country's defence minister, point to a final contract before the next election. McNerney did not explain how the death of a member of the Saudi royal family will influence the F-15 contract.

"Every dynamic [I've seen] has convinced me that it is a nearer term versus longer term resolution," McNerney said.